Why OPEC has little effect

The fact that Qatar will leave next month, will be a blow for OPEC. This will weaken them in their ability to enforce production cuts from all its members. Lets also remember US is investigating OPEC for price manipulation. Russia is not part of OPEC and can refuse to cut production. Shale oil is getting more efficient, selling oil at $10 under par. In Canada its now $43 under par. Bottom line is, oil prices are in a free fall.

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One of the reasons why OPEC will not be able to bring up prices is due to the Khasoggi affair. Media and the world indicted them, but Trump supported them. Since Trump wants the prices lower, OPEC will not be able to bring up the prices yet. Also the fact the the $ is high, the oil prices need to be low or lower, so as not to kill the demand.

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I'm just curious for friday's price movement and at what price will market open on Monday. Since, there was not any major accomplishment in the Opec meeting yesterday, i would like to see some drop to 49 atleast but it will bounce back and forth due to the sentiments at the moment.

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One of the reasons why OPEC will not be able to bring up prices is due to the Khasoggi affair. Media and the world indicted them, but Trump supported them. Since Trump wants the prices lower, OPEC will not be able to bring up the prices yet. Also the fact the the $ is high, the oil prices need to be low or lower, so as not to kill the demand.

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So now the real question arises: is there going to be some technical breakthrough in fractionation (the distillation process)? It would seem that oil refining is pretty much using the same principles and technology as it did a hundred years ago. OK, some of the equipment has been tuned up, but no fundamental changes in the technology.

Let us suppose, as the mind wanders, that some genius develops a totally new method for fractionating oil. The design is so cheap that drillers now put these fractionaters right out next to the pump, and take-offs of finished products can be made right there. Now, how does that change the economics of the oil industry?

For one thing, local consumption of certain distillates, such as diesel, implies that crude does not have to be piped to some remote refinery a thousand miles away, and then trucked or railed back. That seriously cuts costs. For another, it implies that heavy oils such as tar sands can be upgraded and distilled in the tar fields, resolving the big bugaboo in Canada, transporting the stuff out of there.

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the reason the OPEC cut has not had a larger effect is because the market was already expecting it. Remember the market reacts to "surprises" and not so much whether there is a cut or not, unless the cut was unexpected or larger than expected etc which can create the surprise element. The OPEC cut was well anticipated and already priced in by the market for most expecting somewhere between 1-1.5M bpd cut.